Question

As discussed in Units 6.2 and 6.3, C&C Sports experienced direct materials and direct labor variances as a result of purchasing lower quality jacket lining from a new vendor. Review Exhibits 6-10 and 6-13 to refresh your understanding of these variances.

Required
Consider each scenario independently.
a. Assume that after experiencing the variances associated with the lower-quality lining, C&C Sports decides to purchase lining from its previous vendor. Based on past experience, C&C's inventory manager, Bradley Austin, does not anticipate any problems with the previous vendor providing an adequate supply of lining at the appropriate quality level. Provided that C&C's standards are current, what effect would you anticipate this move to have on the direct materials price variance? On the direct materials quantity variance? On the direct labor rate variance? On the direct labor efficiency variance?
b. Assume that after investigating the recent variances arising from the lower-quality lining purchase, C&C Sports decides to continue purchasing this lining and to focus on training its workers to improve their ability to cut and sew the lining. Those workers who had never worked on jackets and were pulled into service to meet the production schedule are also included in this training effort. What effect would you anticipate this move to have on the direct materials price variance? On the direct materials quantity variance? On the direct labor rate variance? On the direct labor efficiency variance?
c. After completing the December production rush, C&C Sports' sales budget does not require any award jacket production in the first quarter. When production resumes at a low level in April, what effect would you anticipate the lack of recent production experience to have on the direct materials price variance? On the direct materials quantity variance? On the direct labor rate variance? On the direct labor efficiency variance?



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  • CreatedFebruary 21, 2014
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